An employee's misconduct has led to a series of regulatory penalties for a major securities firm. The same individual committed violations during two separate tenures, resulting in sanctions for both a local sales department and a provincial branch of the merged entity Guotai Haitong Securities Co., Ltd..

Series of Regulatory Actions

At the start of July, the Xinjiang Regulatory Bureau of the China Securities Regulatory Commission issued three consecutive administrative supervision decisions targeting Guotai Haitong Securities. One decision, numbered [2026] 14, details that an employee, He Moulin, while working at the firm's Urumqi Xinhua North Road Securities Business Department, engaged in client solicitation activities through individuals other than licensed securities brokers. Later, during his tenure at the Xinjiang Branch of Guotai Haitong Securities, he was found to have operated client securities accounts. The regulator imposed a supervisory measure of issuing a warning letter to him and recorded the matter in the securities and futures market integrity file.

The penalties against the institutions were equally stringent. The Xinjiang Bureau determined that the Xinjiang Branch's management of its employees was inadequate and its compliance and risk control was lax. It issued a warning letter to the branch, recorded the action in the integrity file, and demanded a written rectification report within 30 days.

The Xinhua North Road Business Department was found to have issues including an employee using non-broker personnel for client solicitation and insufficient monitoring of related abnormal trading activities, exposing deficiencies in its compliance management. It also received a warning letter and was recorded in the integrity file.

Misconduct Following the Individual

Public records show a clear timeline for He Moulin's career and violations. He registered his securities and fund practice qualifications at Guotai Junan Securities in July 2021 and obtained his investment advisor qualification in October 2024. The two violations occurred at different institutions and in different roles—outsourcing client acquisition at the business department and later operating client accounts at the branch level. This was not a one-off incident but persisted over time. However, from the business department to the branch, no internal control checkpoint along the management chain effectively intercepted these activities. The regulator held the firm accountable for these historical issues despite its name change and merger.

Post-Merger Integration Challenges

The context of the merger adds a layer of complexity. The penalties stem from violations by an employee originally from Guotai Junan, but the responsibility for leading the rectification falls to Liu Cengceng, the current head of the Xinjiang Branch, whose background is from the former Haitong Securities. Leadership of the Xinjiang operation under the former Guotai Junan changed several times between 2020 and 2025. Liu Cengceng's career path mirrors the merger story: he was previously head of a Haitong Securities business department in Karamay, later becoming head of Haitong Securities' Xinjiang Branch. Following the 2024-2025 absorption of Haitong Securities by Guotai Junan, the original Haitong Xinjiang Branch was dissolved, and Liu took charge of the newly integrated Guotai Haitong Xinjiang Branch.

The nuance lies in the fact that He Moulin was an employee of the former Guotai Junan system, and his violations occurred at its branches. Yet, the person now tasked with leading the cleanup, Liu Cengceng, is effectively the "new" leader from the merged-in Haitong side. This scenario highlights the management integration challenges post-merger, where blending two teams, cultures, and compliance standards is a critical task.

Governance Test for a Financial Giant

The absorption of Haitong Securities by Guotai Junan created the largest securities firm merger in China's capital market history. The combined Guotai Haitong Securities boasts the industry's largest asset base. For 2025 and the first half of 2026, its performance scale and growth rate have ranked at the forefront of the industry.

However, greater scale extends the management chain, making grassroots compliance harder to enforce. A failure at any point from the branch to the business department level can escalate into a systemic risk. The fact that He Moulin's misconduct persisted from one office to another indicates that no checkpoint in the management chain functioned as a barrier. The three penalties reveal a deficiency in "governance penetration"—a failure in employee conduct control at the branch level and a gap in monitoring abnormal trading at the business department level. These are not complex systemic flaws but failures in executing basic internal controls.

With three leadership changes in three years at the branch, compounded by the integration of two legacy teams, management continuity is under pressure. Liu Cengceng faces not just three penalty notices but also the historical baggage of a team originally belonging to another company.

For this merged financial titan, the test lies not in scale but in governance. With three penalties issued and 30 days to submit a rectification plan, the focus is on how it will shore up its compliance shortcomings and uphold the reputation and standards expected of a leading institution.